Understanding Power Purchase Agreement for rooftop solar PV systems

The recent cost reduction in solar PV has motivated many building owners to use on-site or off site photovoltaic (PV) generation to hedge against volatile electric utility bills. In case of onsite generation the building owner has an option of installing himself and owns the PV system. Another option to the building owner is to do a PPA with the third party for long terms and avoid the high capital investments. Typically in case of rooftop PV systems, the third party signs a PPA with the building owner and sell the solar electricity as a part of onsite generation to displace his costly DG based power generation. As long as this system is completely off grid, there is no problem in terms of meeting the regulatory compliances, however in case of grid interactive systems, if the solar PV installer at a building installs the PV plant, and go for net metering, there are no guidelines from Government of India for net metering of solar electricity. Also it is not clear that the PPA signed by the third party who sell its solar electricity to the building owner as well as to the grid in the event of non-captive requirement, is he legally allowed to sell the electricity to both parties. The third party sale can be done under the group captive mode where the buyer should have stake in a Solar PV at least 26% and should have at least 51% of solar electricity. Rest of the electricity can be sold to the grid.

A growing number of third-party solar power providers are looking to rent roof surfaces from the home owners and install PV systems and sell the power generated to the home owner/local utility through the different available scheme of solar rooftop policies of government of India. Even commercial building owners can also lease their rooftop on rent to the solar PV developers and can do a long term PPA to use the electricity generated through the PV system.